Moving swiftly, US eases travel and trade rules on Cuba

BRADLEY KLAPPERJanuary 16, 2015

WASHINGTON (AP) — Swiftly expanding trade ties with Cuba, the Obama administration opened the door to easier travel and a wide range of new export opportunities with the communist island starting Friday, punching the biggest hole to date in America’s half-century-old embargo.

Less than a month after the Cold War foes agreed to end their enmity, the Commerce and Treasury departments unveiled new rules Thursday permitting U.S. citizens to visit Cuba without special permits.

Most U.S. travelers still will be required to go on supervised group trips, but now virtually any U.S. company or organization can offer such trips without the paperwork and inspections that discouraged past expansion of travel to Cuba. Some tour operators, already seeing unprecedented interest in legal travel to Cuba, expect some tourists to simply ignore the restrictions.

American companies also now will be permitted to export telephones, computers and Internet technology, and to send supplies to private Cuban firms. However, Cuban authorities have said nothing about the restrictions they might impose on U.S. products entering a country that has long frustrated foreign investors with red tape and tapped-out infrastructure.

The changes are the latest step in President Barack Obama’s plan to rebuild relations with Cuba after a history marred by suspicion, espionage and conflict. The new regulations come three days after U.S. officials confirmed the release of 53 political prisoners Cuba had promised to free.

The U.S. is now “one step closer to replacing out-of-date policies,” Treasury Secretary Jacob Lew said Thursday. White House spokesman Josh Earnest said the new rules “immediately enable the American people to provide more resources to empower the Cuban population to become less dependent upon the state-driven economy.”

They also allow U.S. citizens to start bringing home small amounts of Cuban cigars, long adored by aficionados but banned under U.S. law. The limit is $100 for alcohol and tobacco products and $400 in total goods.

Only Congress can fully end the 54-year embargo. Obama announced last month he would soften the restrictions, arguing that “these 50 years have shown that isolation has not worked.” The new spirit of cooperation emerged after 18 months of secret talks that culminated in the exchange of imprisoned spies and the release of Alan Gross, a U.S. government contractor who had been imprisoned in Cuba for five years.

The few U.S. companies facilitating travel to Cuba say inquiries have exploded since December and American visits are expected to surge this year from about 90,000 annually. “We’re hiring more people. We’ve secured more hotel rooms and assets in Cuba to provide additional travel,” said Tom Popper, president of New York-based insightCuba.

Commercial flights between the two nations are still some time away. Before airlines offer routine service from one country to another, the two governments must agree on the terms in a treaty.

Such an agreement did exist between the U.S. and Cuba in the 1950s. However, Thursday afternoon the U.S. Transportation Department posted a notice saying the two nations need to start fresh. The U.S. airlines with 1950s permission to fly to Cuba will not suddenly regain that right and are not favored in the government’s new deliberations.

“The U.S. government will engage with the government of Cuba to assess our aviation relations and establish a bilateral basis for further expansion of air services,” Susan L. Kurland, the department’s assistant secretary for aviation and international affairs, wrote in the notice.

United Airlines, Delta Air Lines and JetBlue Airways have all expressed an interest in flying to the island nation.

Hotels in Havana and elsewhere generally fall short of international standards, and those with better food and service are almost always fully booked during the winter high season. So the tourism surge could be challenging.

“American tourists are really demanding,” said Maikel Gonzalez, a 34-year-old hotel receptionist in Havana. “How do I explain to one that the taxi didn’t come because it doesn’t have tires or that there’s no water in the rooms?”

Cubans also can legally rent out their homes or apartments, which could mean money outside of state control going to private citizens — something American officials say they want.

Most of the other possible changes now depend on Cuban President Raul Castro’s government.

U.S. officials say American companies will have to weigh for themselves the risks of their exports colliding with Cuban bans.

Profitability is another issue. Foreign companies operating in Cuba currently deal almost entirely with state-owned firms that are notoriously slow, inefficient and short on cash.

Also casting a shadow on potential deals is the possibility of litigation by Cuban-Americans and U.S. firms whose property was confiscated in Fidel Castro’s 1959 revolution. Some may sue companies entering into business with the Cuban government. In Washington, Congress may also seek to erect barriers to new investment.

The sudden rapprochement between Cold War foes has divided U.S. lawmakers. Republican Marco Rubio of Florida and Democrat Bob Menendez of New Jersey, both Cuban-Americans, have been particularly opposed.

But some business groups have welcomed the opportunity to open a new export market in a country 90 miles from Florida. Thomas Donohue, head of the U.S. Chamber of Commerce, said Wednesday it was better for the U.S. to sell computers, smartphones and cars to Cuba than to cede such business to countries like Russia and China.

Cuba is already awash in American products brought in people’s luggage, including iPhones and flat-screen TVs. The main barriers to Internet access are high prices and restrictions imposed by a government desperate for hard currency and worried about allowing citizens unrestricted communications. It’s unclear if Cuba’s government has grown more comfortable providing such access.

Cuban officials are keen on greater travel by American tourists and the hundreds of thousands of Cuban-Americans who currently visit the island each year under a general license.

American officials stress that a general travel prohibition for Americans remains in force. Travelers must certify compliance with U.S. laws with airlines in advance, officials say, and investigators can demand to see records and documents up to five years after a trip is made. Infractions can incur penalties.

But the 12 categories of people now allowed to visit to Cuba are broad. Months after the musicians Jay-Z and Beyonce went to Havana, a Treasury Department auditor declared their trip legal under rules allowing educational travel. They visited an art school and a local theater group.

And cracking down on violators under the new arrangement may prove difficult.

“It’s basically unenforceable,” said John McAuliff, executive director of the Fund for Reconciliation and Development, a nongovernmental organization that organizes trips to Cuba.